Works for Taxes after the earthquake

A company that files income tax in Colombia may settle part of its income tax by carrying out a public work in the municipalities hit by the earthquake, instead of paying that portion to the Treasury. The scheme, officially the modalidad especial de Obras por Impuestos para la Reconstrucción (a special Works for Taxes modality for reconstruction), was created by Legislative Decree 1389 of 9 September 2026 (Decreto Legislativo 1389), issued under the State of Emergency. Under the decree, the contribution cannot exceed 50% of the tax payable on the previous tax year's income tax return. The decree also instructed the Agencia de Renovación del Territorio (ART) and the Departamento Nacional de Planeación (DNP) to prepare an Operating Manual within one month of its entry into force. That deadline expired around early October 2026, but as of today we have not confirmed that the manual has been published. Before making any decision, check the ART's official website to see whether it has been issued. What follows separates three things: what the decree already settles, what still has to be confirmed in its full text, and what depends on that manual.

What it is, and what it is not

This is not a donation, nor an additional voluntary contribution. It is a way of settling part of the income tax the company owes, delivered as a public work in a defined territory. The practical difference lies in visibility and control. The taxpayer selects a project from a previously constituted project bank, takes part in its execution and answers for its delivery. Here, that bank is a dedicated reconstruction project bank, administered and operated by the ART and run in coordination with the Plataforma Integrada de Inversión Pública.

That does not make the mechanism neutral for the company. Depending on how it is structured, it could require advancing the company's own funds before the value is recovered, as explained below.

Where it applies and who can take part

The territorial scope is not a closed list of municipalities. Decree 1261 of 19 August 2026, as amended by Decree 1348 of 31 August 2026, declared a State of Emergency in part of the country. It covers the municipalities listed in Situation Report No. 36 of the UNGRD, Colombia's disaster risk management agency, and any other that can show concrete damage resulting from the earthquake. Decree 1389 applies in the municipalities that fall within the scope of that emergency: 16 departments, including Antioquia, Caldas, Cauca, Chocó, Valle and Caquetá. Decree 1348 added Caquetá and Santander and removed Putumayo.

A word of caution: the Presidency's statement on Decree 1389 lists 16 departments that include Putumayo but not Santander, the opposite of what Decree 1348 provided. If your project is in Santander or Putumayo, confirm the scope in the text of Decree 1389.

The condition is that the authorities of the National Disaster Risk Management System certify the damage through official records or complementary verification mechanisms. These municipalities qualify whether or not they are classified as ZOMAC or PDET.

The damage requirement attaches to the municipality and the project, not to the taxpayer. That is our reading of the decree, which requires damage to the territory. In principle, a company operating in Bogotá or on the Caribbean coast may join a project in an affected municipality without holding any asset there. The Operating Manual could, however, set requirements for the taxpayer.

The cap, by contrast, is set. Under Decree 1389, as reported in the official statement from the Presidency, the amount the company contributes cannot exceed 50% of the tax payable determined in its income tax return for the immediately preceding tax year.

The taxpayer's entry requirements, however, are not confirmed for this route, including any minimum income threshold. This should be checked against the full text of Decree 1389, the Operating Manual and the rules of the ordinary regime.

Which works qualify

According to the official statement from the Presidency, Decree 1389 sets ten investment sectors:

- social and priority-interest housing; - public education and educational infrastructure; - public health and health infrastructure; - drinking water and basic sanitation; - energy and public utilities linked to the recovery; - roads, bridges, airports, transport and connectivity; - information and communications technology; - rural public goods and productive infrastructure; - sports infrastructure; - disaster risk management.

The breadth of those sectors has a clear limit: every project must be directly related to the damage caused by the earthquake and its aftershocks, and must respond to officially identified reconstruction needs.

The decree also draws a firm line: it prohibits using this modality to rebuild or improve the company's own assets, or assets intended mainly for its private benefit. Projects must be public investment or restore goods, infrastructure or services of public interest.

Routes and titles: what is still unconfirmed

Under the ordinary regime, Works for Taxes operates through two options: a trust option and an agreement option. We have not confirmed that Decree 1389 adopts them for the reconstruction scheme. Nor do we know who could use each one, or when the Títulos para la Renovación del Territorio (TRT) would be issued.

Nor have we confirmed the percentages for using the titles, or any equity-based cap on agreements. These points should be checked against the text of Decree 1389, the rules of the ordinary regime and the Operating Manual.

The calendar: a timetable of its own

Under the decree, the reconstruction bank runs on its own calendar and is not subject to the ordinary cut-off dates of the general Works for Taxes mechanism.

The decree sets two deadlines. One is the month it gave the ART and the DNP to prepare the Operating Manual. The other is fifteen business days: the period public entities have to issue their feasibility opinions. It runs from the complete filing of the project, provided no adjustments or additional information are required. Each project needs the feasibility approval of the competent national entity and the DNP's final feasibility opinion. The manual is to set the rules for reviewing projects in parallel and coordinating deadlines across entities. The following also depend on the Operating Manual:

- allocation dates; - formalisation of agreements; - frequency of progress reports; - documents to be filed.

The ordinary regime's dates are therefore not the benchmark. What counts is the reconstruction bank's own calendar and whatever the manual establishes.

Validity and the risks to weigh

The emergency was declared on 19 August 2026 for 30 days, and Decree 1389 was issued within that period. It is, however, a legislative decree: it is subject to review by the Constitutional Court, and if the Court were to strike down the emergency, the mechanism would fall with it. Before deciding, it is worth checking whether the Court has already ruled on Decree 1261 or Decree 1389.

Nor is the analysis free of risk for the company. The scheme might provide for the TRT to be received only on delivery of the work, which is not confirmed. In that case, the company would have to advance its own funds during execution. That would mean a cash cost, plus execution and non-performance risk, all of which must be measured before committing.

How to approach the decision

The question is not whether the mechanism is attractive in the abstract. What matters is whether the company has enough tax payable, the cash to carry the execution and genuine capacity to run a public project under oversight.

The sensible order is:

1. Work out the cap: 50% of the tax payable on the previous tax year's income tax return. 2. Review the reconstruction bank's projects for the municipality of interest. 3. Confirm that the damage is certified, that the work is directly tied to the earthquake and that it does not involve the company's own assets. 4. Check requirements, deadlines and documents against the Operating Manual. 5. Only then, take the proposal to the board.